Article

Making The Case For - And Against - An Apple iTV Television

By Jeremy Horwitz ● Wednesday, February 1, 2012

First came the rumors, then the whispers, and then the official confirmation in Steve Jobs’ biography: Apple’s working on a television. It’s going to be thin, according to people who claim to have seen prototypes. One of Apple’s top iTunes and iPod experts is working on the project, says Bloomberg. And it’ll have a breakthrough interface, Jobs hinted to his biographer.

But should Apple—a company that has surged in popularity thanks to affordable media players, phones, and computers—really get into the rough and tumble television set market? Rivals debut new TVs every year with superior features across myriad models, only to rapidly discount and replace them at a pace that even Apple would find dizzying. This business model has been bad for some companies but good for others, as well as consumers, who have seen constant improvements in screen technologies, physical sizes, and pricing as a result of competition. Many Apple fans are anxious to see what the company can do for televisions, pointing to the company’s disruptive impacts on the smartphone and tablet markets, which successfully created new paradigms for both categories while trivializing the concerns of naysayers. But other people, including users of the current-generation Apple TV accessory, might say no: is there really a need for a big, Apple-branded television when a $99 add-on can improve any TV a person already owns?

iLounge’s editors have been discussing these topics for quite some time—including conversations with readers over Twitter—so we wanted to share some of our most recent thinking with you. Below, we’ll make the case for and against an Apple television, which for convenience’s sake we’ll call “iTV.” We’d love to hear your thoughts in the comments section below, or on Twitter.

Several Reasonable Assumptions

In order to limit this debate to what’s likely, rather than fantasy, it helps to go in with a few reasonable assumptions about iTV.

(1) Apple will almost definitely create a seriously cool TV set. Historically, Apple doesn’t enter a market unless it can disrupt it with a better product, generally a design that’s several years ahead of current rivals. If iTV was merely a rebadged Samsung OLED set, Apple wouldn’t release it. It’s fair to assume that Jonathan Ive’s legendary team has created something that looks as elegant as the original iPhone, and that it’s powered by equally thoughtful software and powerful hardware.

(2) Apple will almost definitely launch with more than one physical size of iTV. Though Apple has previously limited its initial launches of key iProducts to a single physical size, it cannot afford to do this with iTV, given wide variations in consumer needs. Apple may start with only two or three sizes, and/or choose unusual aspect ratios or diagonal sizes for its sets, but it will not attempt to market a “one size fits all” iTV out of the gate. That said, it will likely start with iTVs for wealthy customers, then add additional lower-priced models later.

(3) Apple will almost definitely have adequate retail presence, distribution and marketing support for iTV, despite its lack of past experience in selling televisions. Getting into the TV business is a major commitment for Apple, and while its all but unlimited cash resources are helpful, they won’t be the critical factor here. Apple has enough stores, partners, and advertising resources to sell what will likely be small initial manufacturing quantities without too much trouble; as with the iPod, iPhone, and iPad, it will subsequently expand distribution and marketing as it increases manufacturing capacity. Apple will not drop the ball on pushing iTV, or try a half-baked “just a hobby” pitch akin to the post-launch period of the original Apple TV. A “revolutionary” television set is too big of a new product category for Apple to mis-launch, particularly in the post-Steve Jobs era.

While none of these three factors is guaranteed, all are so likely to be true that they’re practically givens based on Apple’s track record. If any of them doesn’t come to pass, the iTV would be stillborn, and if the right person was calling the shots, the product might never be released at all.

Making The Case For iTV

So why should there be an iTV? Put aside the benefits to Apple’s bottom line and stock price if it continues to grow its footprint like this—we’d hope Apple wouldn’t grow just for the sake of growing. Instead, the question is whether Apple could create a great television, and we have plenty of reasons to be optimistic that an iTV would be great.

(1) iTV will almost certainly continue Apple’s tradition of streamlining the overcomplicated outsides of prior devices. Apple hates overcomplexity, and between their multiple buttons, hidden panels, massive remotes, and numerous ports, even the best TVs beg for bold redesigns. If you’ve hungered for a TV with a single cable, a single button, and an ultra-thin, lightweight chassis, Apple is the most likely company to satisfy your minimalist needs. Anything it leaves on the iTV will most certainly be strictly necessary—for instance, it will only have volume buttons if it has speakers, and it will only have speakers if they can sound good enough inside a thin enclosure. And who wouldn’t love to see tangles of coaxial, component, and HDMI cables relegated to a wireless AirPlay streaming box that could be placed or hidden somewhere else? As with the iPhone and iPad, Apple will dare to reconsider every element in a television, and the results won’t satisfy everyone—but they’ll thrill some, maybe even a lot of people.

(2) iTV will most likely continue Apple’s tradition of leveraging new hardware and software to redefine an existing product category, and consequently push the entire TV industry forward. As of today, different vendors’ “smart” TVs and game consoles can include or leave out a wide variety of features—everything from optional Wi-Fi dongles to video cameras, apps, and confusing remotes. iTV will set a new floor for what “super-smart” TV sets should contain going forward, most likely using high-capacity Wi-Fi and Bluetooth wireless connections to reduce the need for cables and Infrared sensors, while building in an integrated camera, Siri voice controls, and TV-optimized app support. Think of the first iPhone’s Home Screen, then imagine how Apple could leverage a similar slate of features for a television. But will Apple TV run some flavor of iOS, or instead go with OS X? Our editors continue to debate that, but there’s no doubt that iTV will quietly be a sophisticated computer of some sort, albeit with a dead simple interface.

(3) iTV will likely spawn satellite developments, such as improved iOS devices, bigger AirPlay speakers, other accessories, and killer apps. Apple and third-party developers could use iTV as an opportunity to rethink everything from wireless remotes and surround sound speakers to video games and whole-home control applications, say nothing of TV, podcast, and “radio” apps. A lot of the ground work has already been laid with iOS and Apple TV innovations, so moving forward with more powerful and tightly-integrated hardware would be easy, or at least, easier than on rival televisions. There will be accessories; the only question is to what extent Apple will embrace them.

(4) Apple truly cares about revolutionizing content distribution, and will do whatever it can to improve channel and programming selections. If there’s any villain in the television industry now, it’s cable television providers, who have historically forced consumers to pay high prices for bundles of channels they don’t want. Though Apple’s pay-per-show formula isn’t without its own issues, and the company has been demonized for taking large cuts of iTunes Store and App Store sales, it has worked hard to give consumers a la carte media options—individual songs, television programs, and even podcasts—while fairly compensating their owners. Depending on the features Apple includes in the final iTV hardware and software, it could empower consumers to seamlessly pull shows from their existing cable TV service into a DVR-like media library; it could also work with content creators to bring live or a la carte programming directly to consumers.

(5) iTV could potentially replace your computer… for some things. Apple isn’t as concerned about losing Mac sales—which are incidentally historically strong—as it is about cannibalizing PC sales, which continue to fall as the Mac, iPad, and even iPhone become more popular for daily computing tasks. It’s unclear whether Apple will try to make iTV a purely consumption-focused device, but history suggests that any product Apple releases with OS X DNA inside eventually becomes capable of doing a lot more than originally promised or imagined. Will an iTV serve as another place to display iCloud content, like the current Apple TV, or will it be closer to a Mac? It’s easy to imagine an iTV that turns on as you enter a room, displaying the current weather, a list of calendar events, and a customized list of notifications. But the same discussion took place before and after the release of the first Apple TV, and Apple refused to add even basic computer-like features such as web browsing; only hackers were willing to exploit the hardware’s capabilities.

Making The Case Against iTV

Yes, there are some very good reasons to get excited about an Apple-developed television, but there are also reasons that it could be a flop—or a success with some negative consequences. Here are a handful of the arguments against adding an iTV to the Apple product lineup.

(1) Apple doesn’t have the manufacturing scale or dexterity to release TV sets in the variety of sizes and configurations consumers demand. Though the same argument could have been made before the introduction of the iPhone—and Apple’s years of experience selling both computers and standalone monitors might suggest otherwise—the company will need to dedicate considerable human resources to building and selling TV sets, resources it just doesn’t appear to have right now. Established companies have entire divisions devoted to just this task, and unless Apple’s assembled such a division in relative secrecy with new personnel, a new TV business could distract upper management and engineers from other important products, much as the launch of the original iPhone did with the release of Mac OS X. Bear in mind that Apple’s track record with displays has been particularly odd in recent years: it cut what used to be a three-size monitor lineup down to only one, then replaced that monitor relatively quickly with an updated Thunderbolt version.

(2) The iTV could have first-generation hardware and/or software issues, and replacement will be unusually expensive. Every brand-new Apple device has a lot of appeal… until the second-generation version comes out and fixes the first one’s issues. While the original iPad had the fewest problems of any new Apple product in memory, many of its first-generation predecessors had issues ranging from build quality concerns to component failures, each a pain to resolve even for a warranty-covered iPhone that can “easily” be brought back to a store. Will users be expected to buy AppleCare for their TVs? How many years of life can they expect from an Apple-built television? These sorts of issues are regrettably real, and as the recent launch of AppleCare+ demonstrates, they’re not always handled well by Apple. Moreover, unlike the current $99 Apple TV or $199 iPhone, replacing or upgrading a TV set will require a painfully expensive purchase—this isn’t something you’ll expect to swap every two years.

(3) iTV could inadvertently spark a “smart TV specs race,” resulting in even more consumer confusion. Though Steve Jobs suggested that he’d figured out the simplest TV interface possible, the “TV” itself wasn’t exactly the problem. Rather, it was the fact that televisions have traditionally been “dumb” devices, and were subsequently attached to more powerful cable boxes, AV receivers, VCRs, DVRs, and media streamers, few of which were subsequently integrated directly with the display. The bold solution is to build an advanced display with advanced tuning, recording, and streaming hardware inside—or wirelessly connected nearby—using a highly simplified, fully reconsidered interface for managing all of the streams and content. With enough features built in, easily accessed by the user, the days of needing one remote control to select inputs and another remote to surf content could be over. A TV that manages all of its own input for you would be the type of nut that Apple would want to crack.

But there are costs to doing this. The set itself could become more expensive, and directly comparing it to rival products may become confusing—something that Apple may not mind at all, but consumers will find problematic. Will you be able to store videos, apps, or games on an iTV? If so, how many, and how does this compare with app-capable competing TVs? DVRs? What sorts of connectivity to external devices, if any, will you give up with the iTV? There’s a minefield of questions here, and only time will tell how Apple will navigate it.

(4) Apple will price the sets unaffordably, and like its monitors, will try to keep the price high for a long time. Rumors have suggested that Apple will focus on cutting-edge OLED screen technology and plans to price its sets at a steep premium relative to conventional TVs. While a similar rumor was floated before the iPad’s release, seemingly to give the company an opportunity to shoot it down, there’s no way that Apple is going to make the initial iTV cheap by any absolute standard. And if past precedent is any guide, it’s not going to budge on price just because rival sets are becoming more affordable. Forget about iPhones and iPads, which have almost always* stayed at the same prices over time; Apple has repeatedly held monitor prices constant while rivals were becoming bigger and cheaper, citing the superior quality or design of its products. It’s going to be interesting to see whether it changes this pattern for iTV, and whether it can compete in the existing tempestuous marketplace. (* Note what happened with the original iPhone.)

(5) Apple will kill or hurt the current-generation Apple TV as a consequence of the iTV’s release. Even if the Apple TV sticks around—and it really should, as it’s the best iOS accessory Apple has ever developed—there’s little doubt that Apple will put its best technology and resources into the more expensive iTV. It may hold off on giving the Apple TV features that might have radically improved the Apple TV experience, including enhanced apps, wireless FaceTime camera support, and Bluetooth accessories such as traditional game controllers, largely to push customers into making more expensive iTV purchases. The consequence: rather than improving the TV experience for the masses that can afford $99 accessories, Apple will focus on selling super TVs for the wealthy few.

Reality Check

As dire as the case against iTV may sound, Apple rarely acts as foolishly as its worst critics would have you believe—it has shown a remarkable ability to introduce category-redefining products, adapt to changing market conditions, and either design or market its way around obvious problems that would trip up competitors. By the same token, Apple isn’t always as perfect or as ideally intentioned as its staunchest defenders would suggest: it does make mistakes, and occasionally big ones, though its incredible recent track record demonstrates clearly that it’s doing a lot more right than wrong. The original Apple TV was a flop, but after years of tweaks, the release of a second-generation model, and then more tweaks, the concept was polished enough to become truly excellent. Surely those experiences will inform Apple’s standalone television products.

What do you think will happen with an Apple television? Share your thoughts in the comments section below, or on Twitter to @ilounge!

Comments

1

Oh, wow…where to begin on this subject? First of all, as a purchaser of both versions of the ATV, it’s fair to say that I love it, and hope that Apple doesn’t kill it. It’s brought much more life to my first generation circa 2002 Hitachi Plasma, and it’s not a hobby to me: like Tim Cook said about his own Apple TV, I can’t live without mine.

That said, I am not so excited about Apple entering the extremely volatile and highly competitive TV business. Yes, TV’s can be very complex when it comes to dealing with all the peripherals and things of that nature, but the fact that one can get an extremely good 42-60 inch set for under a thousand dollars with many “bells and whistles” built in (sometimes WAYYY under), is a very big deal. And I agree, people who can afford it will buy it, but I wonder just HOW MANY of those people will, unless Apple has somehow managed to make the picture quality so much better than what’s out now. Even wealthy people don’t want to “throw away good money after bad” so to speak. I guess what I’m really trying to say is that if Apple’s version of a TV set can’t easily distinguish itself on picture quality (as opposed to bells and whistles), I don’t know it it can succeed in the cut throat highly competitive TV market.

Posted by Michael R Smith on February 1, 2012 at 5:46 PM (CST)

2

You didn’t really scratch the surface of the issues confronting them in this space. Lets just look at the US market. Only about 15% of US consumers get their TV over the air. The rest get it via cable or satellite. This happens for a variety of reasons, either because they simply can’t get enough channels OTA or aren’t allowed to install an antenna by their neighborhood or whatever.

For those 85% of US consumers the TV is a monitor. The actual tuning device is the cable or satellite STB that they own/rent. And the remote they use 99% of the time to watch TV is the one that came with that STB. It has buttons to allow it to turn the TV on and off, and adjust its volume, so often the regular TV remote control is put away and never seen again.

4

What compelling feature can Apple bring to TV? My TV displays video. Why do I need a slick Apple GUI for something that essentially only has one button—power on/off—already?

I don’t believe they can do much. I don’t need an expensive new TV because “TV remotes have too many buttons”. I have a Playstation for “apps”.

If Apple is making a TV, I’d suggest it’s an effort to exploit their brand and retail structure to sell effectively the same TV as Samsung and Sony and Visio at a higher profit.

Posted by Ben on February 3, 2012 at 10:52 AM (CST)

5

I don’t believe Apple will try to dominate the television market the way it has with the iPod, iPhone and iPad. My guess is they’ll take a Bose-type of approach, produce one model in maybe two or at most three sizes and charge a premium on the basis of the Apple brand and whatever innovative features are included.

Bose currently sells only one model in only one size, the 46-inch VideoWave. The big selling poor is the superior audio performance, along with an intuitive remote control. At $5K per unit retail, I doubt Bose sells very many, but at that price point they don’t have to sell a lot of units to turn a profit. I’m thinking Apple will do something similar.

Posted by Downing on February 3, 2012 at 3:58 PM (CST)

6

Apple could offer a reasonable selection of TV shows as part of a subscription package. Since Apple doesn’t seem to like offering subscription packages, and since media companies rejected Apple’s attempt to offer $.99 TV show rentals, this would be a long shot.

Suggests that Apple would have to incorporate some form of live TV that wasn’t internet based, meaning cable, satellite or OTA.

Since OTA only represents 15% of US consumers, and those probably have lower than average incomes, this doesn’t seem like a good fit. Easy enough to do though. But would live TV without a DVR be good enough?

To support cable (well big cable and Verizon but not AT&T U-Verse) Apple could adopt CableCard. But Cable Card is a ‘world of hurt’ as Tivo already knows. The only way to make this viable would be to partner with Comcast et al, shipping TVs pre-paired. Sort of like their partnerships with AT&T et al in mobile.

To support satellite, they’d have to partner. There is no other choice.

Posted by Fanfoot on February 3, 2012 at 8:09 PM (CST)

7

Its NEVER gonna be called iTV. That’s a British tv network that’s not changing 4 or 5 channel names. Stop calling any proposed tv by apple iTV.

Posted by Derek on February 4, 2012 at 2:33 PM (CST)

8

Just a thought - it’s all very well considering the TV viewing situation in the continental US, but there is, you know, the rest of the world? Where there are lots and lots of people who also buy TVs & etc. And almost all of us have a different way of doing things to you guys.

If Apple build a TV set that only caters to US broadcast standards, they’re throwing away a vast amount of cash.

It would be much better to just give the thing a couple of HDMI inputs and let whatever is out there already deal with ‘live programming reception’. However then they’re going to have trouble justifying any sort of price premium over existing ‘smart TVs’.

All this to me suggests actually making an ‘Apple Branded Television’ is far more trouble than most US-focussed industry commentators seem to think it will be.

Posted by Jonathan on February 6, 2012 at 12:14 PM (CST)

9

@#7,

Derek, ol’ pal, you DO realize that Cisco had iOS and iPhone and Apple just basically took them and ran, right? You think some limey TV station is going to stop the AAPL steamroller? Not me! :)